The purchase represents VersaBank's entry in the American market
VersaBank, a Canada-based commercial lender, is expected to consummate a deal to buy Minnesota-based Stearns Financial Services Inc. by the fall, a move representing its entry into the US market.
David Taylor, president and CEO of VersaBank, updated shareholders during an earnings call on Wednesday. The company announced plans to purchase the Minnesota bank earlier this year.
“We continue to have significant additional upside to our growth in Canada through our proposed acquisition of US-based Stearns Bank Holdingford,” Taylor said. “This acquisition will be transformational for our bank, enabling us to broadly launch our unique and attractive financing solution to what remains an underserved market in the United States.”
Waiting for regulatory approval
Taylor added the deal was still awaiting approval from US regulators: “We continue to make incremental and meaningful progress towards receiving a decision from the US regulators with a decision from our Canadian regulators to follow. We are as comfortable as we've ever been with the prospects for a favorable outcome. We recognize this has been a protracted, but necessary process, especially with the recent challenges experienced by US banking sector.”
Taylor noted the protracted nature of regulatory approval, but assured shareholders the deal would be official by autumn. “We appreciate the continued diligence of our regulators and appreciate the patience of our shareholders who we know are as eager as we are to bring this opportunity to fruition,” Taylor told shareholders during the company’s earnings call. “We continue to be as transparent as possible in guiding towards an expected decision date, which we are now targeting for autumn of this year.”
Once US approval is secured, bank officials will await endorsement from Canadian regulators, he added. “If favorable, we'll proceed towards Canadian regulatory approval and closing of the acquisition as quickly as possible thereafter,” he said. “The limited launch of the RPP program in the United States continues to give us confidence in what we can achieve with a broad national launch.”
Breaking down the timeline
Responding to a reporter’s question, Taylor said the likelihood of a delay in the transaction was slim. “Well, it's a tiny risk, but it's not non-existent,” he said. “The US regulators [have] got their work cut out for them with the various challenges that have surfaced. And frankly, we're a pretty small transaction. We don't move the needle for them. Now mind you, after saying that, we're part of the cleanest bank anybody's ever seen.”
He broke down the likelihood of a deal being done by fall: “I’d say we’re in the 90% that we’ll see some movement in the fall.”
According to a press release from VersaBank earlier this year, the company agreed to purchase Stearns Bank Holdingford N.A. for some $13.5 million. Stearns Bank Holdingford is one of three charters held by Stearns Financial Services Inc
“For over 45 years, Stearns Bank has proudly served the strong and vibrant Holdingford area, and we are excited to continue to do so in our partnership with VersaBank and surrounding locations,” Stearns Bank Holdingford N.A. President Heather Plumski said in a prepared statement at the time. “It speaks volumes that our Canadian neighbor, VersaBank, has chosen Holdingford as the best location to launch its US-based banking and financing. VersaBank shares our values and culture, and we’re confident VersaBank will be welcomed with open arms in Holdingford when the community gets to know our Canadian partner.”
Stearns Financial Services Inc.’s president, Kelly Skalicky, added: “Congratulations to Holdingford on its continued growth and for attracting VersaBank for its US expansion plan. (VersaBank President and CEO David Taylor) and the VersaBank team are terrific and proving to be a perfect partner – together, we will deliver even more to our local communities and beyond.”
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